Miners Are Still Mining Bitcoin Despite Increasing Hash Rate

Bitcoin, the cryptocurrency developed in 2009, has significantly changed the way we understand transactions. With the use of blockchain technology, it has proved that it is possible to get rid of third parties in performing transactions. But more than a currency that can replace fiat, it has been viewed by others as modern gold. In fact, Gemini President Cameron Winklevoss is bullish on Bitcoin and even thinks that Bitcoin is gold 2.0. And part of what makes it more like gold is its volatility.

Computational Power Increasing

Bitcoin has climbed from $1,000 to almost $20,000 in 2017. And it has led to a huge influx of new miners interested in the cryptocurrency. The problem began when regulatory changes came and the price of Bitcoin stumbled in 2018. At this point, the hash rate has continued to grow and increased by over 100% in just the last four months. This was the same period when the price of Bitcoin slumped quite significantly.

Basically, miners need to keep up with their computing power into the Bitcoin network. Following a price drop, the hash rate doesn’t drop which simply suggests that miners aren’t really turning away from mining Bitcoin.

A Bullish Sign for Bitcoin?

Though with decreasing profits on Bitcoin, the climbing hash rate signifies that there are those that have a long-term outlook towards Bitcoin. If you asked Tom Lee, who is the head of research at Fundstrat Global Advisors, he predicts that Bitcoin is going to surpass its all-time high. He recently updated his prediction saying that Bitcoin is going to hit $22,000 this year. He based his prediction from Bitcoin’s historical trading price at 2.5 times its mining cost.

And Tom Lee isn’t the only one that has a bullish outlook on Bitcoin. Julian Hosp, who is the president and co-founder of crypto-wallet and card startup TenX, believes that Bitcoin will potentially be around $60,000 and all it needs is just one positive regulatory change.

Hosp said that “If we see over $10,000 by the end of August, we can see the $20,000, then the press, and the media is going to come in, and we can still see the $60,000 this year”. He added that “I predicted for 2018, we’re going to see $5,000 and $60,000. So $5,000, we pretty much hit it, so let’s see if we can do the $60,000. I’m still quite confident”.

A Bearish Prediction on Bitcoin

But of course, there are those that have a different opinion regarding Bitcoin and cryptocurrencies. Recently, Joseph Stiglitz who is a Nobel Prize-winning economist mentioned that in 10 years, Bitcoin is “worth just $100”. He also mentioned that regulations are going to bring down Bitcoin.

The US Securities and Exchange Commission has considered both Bitcoin and Ethereum as commodities. It implies that rules on stocks and other investment vehicles are not applicable to both Bitcoin and Ethereum.

In addition to this, the European Parliament also released a report saying that banning cryptocurrencies is a mistake. According to the report, “The economists who attempt to dismiss the justifications for and importance of VCs, considering them as the inventions of ‘quacks and cranks’, a new incarnation of monetary utopia or mania, fraud, or simply as a convenient instrument for money laundering, are mistaken”.